Wednesday, July 14, 2010

Budgets and New Plans

For someone who's not especially fond of numbers (I am, and forever will be, a word girl), I get a lot of pleasure out of making budgets. I like setting them up, changing things around, playing with different scenarios, and calculating the numbers again and again and again.

I recently read these guidelines for setting up the ideal household budget, recommended by the experts such as Dave Ramsey and Suze Ormen:

       Housing - 40% (include your mortgage or rent payment, insurance, water, gas, electric)

       Credit Cards, School Loans, etc - 10%

       Car - 15% (include car payment, gas, insurance, repairs)

       Savings - 1 to 5%

       Food - 15%

       Entertainment - 10% (cable, cell phones, Netflix accounts, etc)

       Misc - 5%

I plugged in our own numbers, fully expecting to see one or more areas where we needed some adjustments.  To my (happy) surprise though, everything fit neatly into its recommended allotment.  We're doing something right!

Looking at the budget inspired me to once again make a list of financial goals, complete with a loose time table.  I like making lists even more than I like making budgets.   There are certainly smaller goals along the way, but these are the big goals, in order, that make up our plan for the next five years.
  1. Pay off the rest of the credit cards
  2. Pay off my Sequoia
  3. Pay off the second mortgage
  4. Save up for a good down payment on a new house (which we can do quickly by rolling the payments we'd been making on the credit cards, car, and mortgage into a savings account)
  5. Sell this house and buy another, with NO debt other than the new mortgage, which we will of course:
  6. Immediately start paying extra payments on, to pay off in a short amount of time
I like it.

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